updated 4/22/2004 7:58:42 AM ET 2004-04-22T11:58:42

AT&T Corp., the top U.S. long-distance phone company, on Thursday said first-quarter earnings plunged 47 percent as sales and prices eroded due to stiff competition.

AT&T, under pressure from local and wireless phone carriers, said net income fell to $304 million, or 38 cents a share, from $571 million, or 73 cents a share, in the year-earlier period.

Analysts had forecast earnings of 33 cents a share, according to Reuters Research.

Long-distance carriers such as AT&T and MCI Inc. have suffered from the rise of wireless telephones, tough competition as the Baby Bells attack the long-distance market and lackluster spending by corporate customers.

AT&T’s revenue fell 11.1 percent to $8 billion, in line with analysts’ estimates, reflecting a 9.1 percent decline in business revenues and a 16.2 percent decline in consumer revenues. The company has said its full-year 2004 revenue would drop by about 7 percent to 10 percent.

Operating income in its business unit fell 86 percent, to $81 million. AT&T blamed the decline on $91 million in restructuring charges and “lingering” effects of business lost last year.

AT&T cut its prices and vowed to remain competitive after it said earlier this year that some competitors had slashed prices toward the end of 2003.

The consumer business posted operating income of $371 million, a 41 percent decrease from year-ago results.

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